Principles of market movements | Forex Factory

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Principles of market movements

  • #1
  • First Post: Edited Jan 11, 2009 1:09pm Dec 12, 2008 11:58am | Edited Jan 11, 2009 1:09pm
Main purpose of this thread-understanding the movement of the market with te help of volumes. The sense of all theory is very simple: the market forms volume, and than trades from the prices with max volumes.

http://savepic.ru/373672.png http://savepic.ru/356264.png

Simple example. We take any day, for example 01.12 (the euro Futures): the Volume of day was made on the price 1,262:
Volumes you can take from programs working with feed.

http://savepic.ru/391236.png

http://savepic.ru/374835.png

Now we take a look how the next day trades from that volume.

http://savepic.ru/375859.png

Buy from max volume accumulation of the previous day.

It is important.All intraday movements lean on intraday volumes of day + last volumes. The FX market follows these quotations.Reaction of
the market to these injections (volumes) looks in shape of "rebound", as is shown in drawing above. Why so the market reacts to the volumes?
The price on which the large volume is accumulated, it is the price on which large players buy or sell, people, who knowe how the system works.
On such prices turn-overs are hundreds million dollars, these prices are key levels from which any market trades.
On an example 2.12 this situation can be described so:
On Monday large positions have come into the market under the same price. It is possible to consider it as the price behind which there are big money.

On Tuesday we see that during the period from 4:00 the market was above this level of a previous day, and has pressed through the market only to the price 1,262.Usual traders are not capable to resist injections of big money.We see reaction of the market to the prices with large volume in a kind of rebound from that prices.
skype: aleksey_trader
  • #2
  • Dec 12, 2008 12:16pm Dec 12, 2008 12:16pm
Example of the same trading principle.Max volume of the day-2.12 was formed on the price 1, 27:

http://savepic.ru/378948.png

The same system of trading from the max volume of the previous day:

http://savepic.ru/393133.png

Pay attention that the market has reached volume of Monday 1, 262 - level from which traded Tuesday.
skype: aleksey_trader
  • #3
  • Dec 12, 2008 12:28pm Dec 12, 2008 12:28pm
Analysis 12.12 on euro. The logic of the movement of market from volume of the previous day: today market opened above max volume of the previous day- that means "we are in a buy-zone".looking where to open a "buy" position.the market gives system deals from the price with max volume.

http://savepic.ru/380822.png

Trades from that volume:

http://savepic.ru/351149.png
skype: aleksey_trader
  • #4
  • Dec 12, 2008 12:58pm Dec 12, 2008 12:58pm
Great thread Alex, thanks! Sensible and logical concepts. I have a question, if one doesn't have a data feed service other than meta trader, is there a way to figure out previous day's volume? Would this be the 50% retrace of prev day hi-to-low fib?
  • #5
  • Dec 12, 2008 1:47pm Dec 12, 2008 1:47pm
Quoting shiva
Great thread Alex, thanks! Sensible and logical concepts. I have a question, if one doesn't have a data feed service other than meta trader, is there a way to figure out previous day's volume? Would this be the 50% retrace of prev day hi-to-low fib?
No.I advise you to use something that counts volume.Other methods are unprofitable.Because nothing esle shows it.
skype: aleksey_trader
  • #6
  • Edited 4:26pm Dec 12, 2008 1:59pm | Edited 4:26pm
Let's consider the market movement (euro futures) last week. First we will look at the volumes of all contract since 08.09, as that day there was a change to the December contract.
Max volume for contract prices (till Thursday 04.12 at 8:00):

http://savepic.ru/369734.png

During all the contract on the prices 1,263 1,27 1,285 huge volume was formed.As current contract comes to an end, from 1st to 5th of December on the market appears large volumes of days (closing large positions).That forms total volume of week on the price 1, 262:

http://savepic.ru/360518.png

On Thursday 4.12 at 8:00 we already have large volume of week which has been formed for three days.Pay your attention: volume of the week 7179 lots, and volume of all the contract 19767 lots.
That means only for 3 days was formed 1/3 of all volumes for the contract.That tells about serious movement in the market.Exactly that happened on Thursday:


http://savepic.ru/371630.png

I show in more details as happens deal on "buy" from these levels. After 8:00 the market gained from level of week 1, 262 and what`s interesting - on that price-1.262 from 7 to 8:00 was formed max volume of an hour, hour befor strong movement.
Volume of an hour we see on a cluster chart:


http://savepic.ru/370606.png


Now we look for the process how the market gained from formed volumes:

http://savepic.ru/363438.png

Finally the market gained from max volume of the contract, which was on 1,263.
Such powerful movements of the market happen from large week volumes and max contract volumes.It always happen in the same way.
skype: aleksey_trader
  • #7
  • Dec 12, 2008 2:16pm Dec 12, 2008 2:16pm
Just curious what kind of charting package your using
  • #8
  • Dec 12, 2008 2:28pm Dec 12, 2008 2:28pm
Quoting trader1234
Just curious what kind of charting package your using
I use everything that helps to trade.charts from trading platform.
skype: aleksey_trader
  • #9
  • Dec 12, 2008 2:40pm Dec 12, 2008 2:40pm
Is it just me or is that bloomberg you're using?
  • #10
  • Edited 4:11pm Dec 12, 2008 2:57pm | Edited 4:11pm
Quoting Ronald Raygun
Is it just me or is that bloomberg you're using?
Looks like Bloomberg service but he said this is Volfix platform.
  • #11
  • Dec 12, 2008 3:14pm Dec 12, 2008 3:14pm
anyone know if there's a "cluster" indicator for mt4 that shows the cluster information shown above? Tried a search but had no luck. Maybe under a different name?
  • #12
  • Dec 12, 2008 4:21pm Dec 12, 2008 4:21pm
The trading software that i see from up bar is called VOLFIX!

Really interesting this method, it seems an advancement of VSA!

Maybe it can be done something like that with metatrader, making an indicator that shows the volumes of the bars and at what price is the maximum volume.

Lubo.
If I know how, I tell You!! Few but Good!!
  • #13
  • Dec 12, 2008 4:22pm Dec 12, 2008 4:22pm
Quoting trader1234
anyone know if there's a "cluster" indicator for mt4 that shows the cluster information shown above? Tried a search but had no luck. Maybe under a different name?
Information above in such enterpritation shows only that programm.Though Market delta has cluster charts too, with delta volumes.Bloomberg has some similar instruments, cqg and e-sygnal work with feed too.As for me its much easier to work with volfix.If people are inerested, I`ll continue to post here information about trading by volumes on gold, euro and s&p futures.
skype: aleksey_trader
  • #14
  • Dec 12, 2008 4:33pm Dec 12, 2008 4:33pm
Quoting Alex_S
Information above in such enterpritation shows only that programm.Though Market delta has cluster charts too, with delta volumes.Bloomberg has some similar instruments, cqg and e-sygnal work with feed too.As for me its much easier to work with volfix.If people are inerested, I`ll continue to post here information about trading by volumes on gold, euro and s&p futures.

Hi Alex_S,
thanks for thi tread!

I went to volfix page , and says only that you can download the demo with one month dalay.
Could you tell something more about? like on the price fee, data feed, which broker can be use ....etc..

Thanks.

Lubo

P.s : Continue the explanation is really very interesting.

If I know how, I tell You!! Few but Good!!
  • #15
  • Dec 12, 2008 4:44pm Dec 12, 2008 4:44pm
Quoting LuboLabo
Hi Alex_S,
thanks for thi tread!

I went to volfix page , and says only that you can download the demo with one month dalay.
Could you tell something more about? like on the price fee, data feed, which broker can be use ....etc..

Thanks.

Lubo

P.s : Continue the explanation is really very interesting.

No problems.But lets talk about such thing in private.I dont want this stuff to be deleted because of abuses in advertising.I want this thread to be only about trading.Maybe later Ill make a thread about technical questions-here only trading.Demo of this programm I can ask with online data with no delay.
skype: aleksey_trader
  • #16
  • Edited Dec 13, 2008 1:53am Dec 12, 2008 4:55pm | Edited Dec 13, 2008 1:53am
Base material is here http://www.forexfactory.com/showthread.php?t=136777
trading situations will be tomorrow.
skype: aleksey_trader
  • #17
  • Dec 12, 2008 4:55pm Dec 12, 2008 4:55pm
Quoting Alex_S
No problems.But lets talk about such thing in private.I dont want this stuff to be deleted because of abuses in advertising.I want this thread to be only about trading.Maybe later Ill make a thread about technical questions-here only trading.Demo of this programm I can ask with online data with no delay.
Ok Alex,
i think you are right.
I asked without malice, with ingenuity.

Talk about trading, it's is more useful.

Thanks!!

Lubo
If I know how, I tell You!! Few but Good!!
  • #18
  • Dec 13, 2008 4:03am Dec 13, 2008 4:03am
Let's consider on an example how traded the current contract on s&p 500 mini futures.With the help of volume counter I look for the prices
with the maximum volumes for the contract. A principle is simple: in the beginning of the contract investors open long-term positions and that forms a trend.
After accumulation of large volume there is "working off" of prices with max volumes and strong movement.The market comes back to the prices with large volume and without "pressing them through" it "flies away".
The first prices with large volumes in the beginning of the contract: 1179 / 1250 / 1252/ 1250 / 1210.

http://savepic.ru/353384.png

Chart shows all the contract that began in September:

http://savepic.ru/343975.jpg



Market declined.After strong movement on sale on the prices 967 and 968 new maximum volumes for contract appeared, that means that possibly the trend may be reversed or
may also continue to decline for a long time. The market has given sales from that prices.And declined again. After that the new volume of the contract has been made on
the price 870,and that new max volume reversed the market to the previous max volume on 967-968.

http://savepic.ru/348264.png

All given movements of the market are used for opening positions on "buy or sell", only when it is confirmed by intraday volume and there is an intraday-deal in the same way.
skype: aleksey_trader
  • #19
  • Dec 13, 2008 7:45am Dec 13, 2008 7:45am
This is currency futures.

How is that volume related to the spot market??

I don't see the relationship.
  • #20
  • Dec 13, 2008 7:53am Dec 13, 2008 7:53am
Quoting wiztrader
This is currency futures.

How is that volume related to the spot market??

I don't see the relationship.
On futures we can see a volumes.volumes that form movement.currencies, commodities, indexes.volumes on futures shows what is going on the futures market as well as on the spot makret as they are unseparable.
skype: aleksey_trader
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